Select a region
Tax and spending proposals for 2023 will be published by the Policy & Resources Committee later today.
The Committee's Treasury lead, Deputy Mark Helyar, has been putting the finishing touches to the 2023 Budget ahead of the midnight deadline for submitting it in time for the States' Assembly to debate it at a special meeting on 1 November.
The Committee's Budget proposals will be unveiled to other deputies this afternoon and then published less than a week after its President, Deputy Peter Ferbrache, told the States that his Committee needed to scrap a 10-year plan of public sector reforms and efficiency savings started in 2015. He said it was "the worst plan I've ever seen in all of my life - business, professional or States-wise" and that "current expectations in terms of savings are pathetic".
Deputy Ferbrache said that around 100 civil service posts had been removed but that no more could be removed "through efficiencies alone" and that further reductions in the size of the public sector workforce "would mean cutting into the delivery of services".
"We're moving nearer the day that we will have to turn off services," he warned. "That's how stretched we find ourselves."
Pictured: Deputy Peter Ferbrache warned the island about the States' challenging financial position when he made a statement to the Assembly last week.
This will be the Committee's third annual Budget since it was elected in October 2020. Deputy Helyar will present it to the States against a financial background which his President said provides "the most difficult job of any States" since his political career began in 1994.
Deputy Helyar, pictured (top), is under pressure for the 2023 Budget to provide relief for households struggling with cost of living pressures.
At the end of June, the annual rate of inflation locally hit 7%, the highest rate for more than 30 years. The States' latest published forecast is that inflation could reach 10% by the end of the year. The Committee said last month that the average household should prepare for energy bills of around £2,500 a year by the end of 2022, which would be an increase of between 20% and 25% in just 15 months. And interest rates are forecast soon to rise to their highest level for 15 years.
In Jersey, the States recently agreed a mini-budget with a range of "timely, targeted and temporary" measures worth than £50million over the next two years to help households facing rising inflation and interest rates. In the UK, the Government recently announced that it was prepared to borrow nearly £200billion to pay for a range of tax cuts and cap the average energy bill at £2,500 a year until 2024, although this was followed by a run on the pound and the Bank of England stepping in to pledge that it would buy government bonds worth billions of pounds because of a "material risk to UK financial stability".
In Guernsey, there have been no announcements yet about specific financial measures to alleviate most households' cost of living pressures. Any such measures planned by the Policy & Resources Committee would normally be included in today's Budget proposals.
Pictured: Cost of living pressures facing households in the Bailiwick are now greater than they have been for decades.
Deputy Helyar and his colleagues are also facing increasing pressure on States' spending, partly as a result of demographic changes.
The States' Accounts for 2021 revealed that in the first full calendar year of the current States' term "net revenue expenditure, excluding the expenditure on the covid-19 support schemes, increased by £26.2m...which is an increase of 6.2% in nominal terms and £6.8m or 1.6% in real terms", although "this includes expenditure of approximately £10m in 2021 which, in previous years, would have been met from separate funds and reserves but is now directly funded within general revenue".
Deputy Bob Murray, the Vice President of the Committee for Education, Sport & Culture and a colleague of Deputy Helyar's in the Guernsey Party, said in the States last week that he expected the 2023 Budget to reveal a significant overspend on health and social care.
"Our health sector currently has well over 400 vacancies," said Deputy Murray. "I suspect we're going to find shortly, when the [2023] Budget is announced, that the Committee for Health & Social Care is likely to have exceeded its budget by probably millions of pounds.
"Personally - and I am really sad that this is the case - I cannot see this getting anything but worse for some considerable time."
Pictured: Deputy Bob Murray, speaking in the States' Assembly last week, speculated that the 2023 Budget would have to take into account significant overspending on health and social care services.
The 2023 Budget is separate from the Committee's ongoing review of long-term tax and spending policies.
The Committee is projecting a shortfall in States' finances of up to £85million a year by the end of the current Assembly's term in 2025. It wants to introduce a goods and services tax (GST) at 5% or 8%, but opposition from other deputies has forced it to defer its proposals on two occasions - once in October last year until July this year and a second time until the fourth quarter of this year.
The Committee will need to submit its long-term tax and spending proposals by 7 November for them to be debated by its end of year deadline.
READ MORE...
"We're nearing the day that we will have to turn off services"
P&R tight-lipped on whether tax proposals remain on track
Firm appointed to review whether companies could pay more tax
P&R wants more time before States debate GST and other taxes
OPINION: Why Guernsey needs to reform its company tax system
FOCUS: Opposition across the States to P&R's latest GST plan
FOCUS: Further work on company tax as more deputies reject GST
P&R wants to win public support for GST ahead of summer debate
EXPLAINED: Why the States' leaders believe GST is needed now
Guernsey leaders abruptly pull GST plans
Comments
Comments on this story express the views of the commentator only, not Bailiwick Publishing. We are unable to guarantee the accuracy of any of those comments.